2010 (7) TMI 354 - AT - Central Excise

Cenvat credit - authorities found that goods were used for manufacture of structures which either supported the machinery or the enclosures having machinery in the factory, and the manner in which they were used does not disclose the same to be capital goods entitled to avail credit under the Cenvat Credit Rule - final goods for which the goods were utilized being structural items like platform, supporting structures used for making foundation and base, none of them were eligible to avail the Cenvat credit as was rightly observed by the adjudicating authority - order cannot be sustained

Summary

Issues:
Challenge to order disallowing Cenvat credit and imposing penalty.

Analysis:
The appellants contested an order disallowing Cenvat credit on various items and imposing a penalty. The adjudicating authority disallowed credit amounting to Rs. 15,92,582/- on items like MS Channels, MS angles, MS Beams, etc., alleging they were not capital goods. The respondents, engaged in manufacturing various products, argued that the credit was correctly availed for goods used in the factory for manufacturing the final product. The adjudicating authority held that the goods were only structural items falling under Chapter 73 and disallowed the credit.

In the appeal, the Commissioner (Appeals) disagreed with the adjudicating authority, stating that most items were used in the manufacture/fabrication of essential components and accessories of plant machinery, making them eligible for credit. The Commissioner analyzed each item's use in the factory, concluding that they were used for structure fabrication supporting machinery or buildings. The Larger Bench's decision in Vandana Global Limited v. Commissioner of C. Ex. Raipur was referenced, emphasizing that goods like cement and steel items for laying foundation and building supporting structures cannot be treated as inputs for capital goods or final products, thus not eligible for credit.

The authorities found that the goods were used for manufacturing structures supporting machinery or enclosures, not qualifying as capital goods for credit under the Cenvat Credit Rules. As the final goods produced were structural items, not eligible for credit, the impugned order disallowing credit was upheld. Consequently, the appeal succeeded, and the impugned order was set aside with all consequential relief.